Comparative Takeover Regulation and the Concept of 'Control'

Singapore Journal of Legal Studies, p. 208, 2015

26 Pages Posted: 26 Nov 2015 Last revised: 7 Jul 2016

See all articles by Umakanth Varottil

Umakanth Varottil

National University of Singapore (NUS) - Faculty of Law

Date Written: November 26, 2015

Abstract

The mandatory bid rule (MBR), one of the basic tenets of takeover regulation, obligates an acquirer who obtains ‘control’ over a target company to make an offer to acquire the shares of the remaining shareholders. What amounts to ‘control’ is far from clear; some jurisdictions follow a quantitative approach based on a specific shareholding threshold such as 30% voting rights, while others follow a qualitative approach through a subjective determination based on several factors, such as the specific rights available to an acquirer under a shareholders’ agreement or the constitutional documents of a target.

The goal of this article is to consider the merits and demerits of these approaches. It seeks to do so by examining various models adopted in jurisdictions for pegging ‘control’ so as to invoke the MBR. It delves into the regulatory experience in India as that jurisdiction not only adopts a combined approach (taking into account both the quantitative and qualitative tests for control), but has also been subject to a great deal of controversy and litigation in recent years that have helped tease out the jurisprudential contours of the concept. It concludes with a normative assessment that points towards partial harmonisation.

Keywords: Control, mandatory bid rule, takeover regulation, India

JEL Classification: K22, G34

Suggested Citation

Varottil, Umakanth, Comparative Takeover Regulation and the Concept of 'Control' (November 26, 2015). Singapore Journal of Legal Studies, p. 208, 2015. Available at SSRN: https://ssrn.com/abstract=2695703

Umakanth Varottil (Contact Author)

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

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